How To Avoid Stock Scams

Scam artists are nothing new; in fact they have been around since the beginning of time. There are scams targeted toward the young and old, the rich and poor and everyone in between. When it comes to investing your money you must be aware of the fact that there are a lot of people or companies out there offering stock or investment advice that are interested only in separating you from your money. Avoid becoming their next victim by recognizing the following warning signs that you may be dealing with an individual or company that is not legitimate.

• Guarantees a return- There is always risk involved with the stock market. If you are looking for a “safe” place to invest your money you are better off buying a bank CD or treasury bond. Beware of anyone who guarantees an amazing return.
• Email or infomercials- Common sense would tell you that any investment opportunity that you find in the early morning hours on television or unsolicited in your inbox is a scam. Unfortunately due to the large number of people who fall for this scam it requires a mention.
• Investment seminars- Many investment seminars charge thousands of dollars and the only thing you get in return for your trouble is an invitation to attend another seminar or an offer to pay for software or other advice that is supposed to “help” you with your investments.
• Unknown companies- Look for names that you recognize when considering investments. If the name is not familiar do your research. In many cases when the company touting the investments in not known it is a sign of a scam. Note: Familiar or popular companies do not automatically equal a good investment. You should always research companies regardless of the popularity of their name before investing your money.
• Hard sells- It’s your money and you shouldn’t feel pressured to invest it anywhere. If the person trying to sell the stock is too pushy he isn’t looking out for your best interest, rather his own.
• Sounds too good to be true- As with all things in life if it sounds to good to be true, it probably is. It is common for first time investors to fall for penny stock scams, pyramid deals and Ponzi scams.

It is important to keep a vigilant eye on your money at all times. With the current state of the economy people are desperate for money and con artists are on the prowl looking to take advantage of anyone who is willing to risk investing money in the hopes of a big payoff. Protect yourself by questioning the source of information and paying special attention to any tips or offers that claim to generate high yields with no risk.